RETIRE.FUND: February 2010

Thursday, February 18, 2010

IMF selling gold usually dampens demand, but this strategy may backfire bigtime.

The International Monetary Fund is again selling gold to bolster it's cash so as to be positioned to help (read bailout) more troubled economies, which seem to be propping up at present, all over Europe. When the IMF sells gold, it usually has a dampening affect on the price. Often, that is the real reason for selling in the first place. However, with China and India in the hunt for more gold reserves, the strategy is set to backfire.
Even though China has the 6th largest gold reserves in the world at this writing, it constitutes merely 1.5% of it's entire foreign reserves of over 2 $Trillion. Compare that to European countries like Germany who's gold reserves constitute over 60% of total foreign reserves. France= 61.5% etc etc.

China's gold reserves add up to a measly $29 per citizen, a paltry sum by the standards of developed countries. As China looks to diversify it's FR funds, gold will become a growing part of it's acquisitions. Even if China was to double it's gold reserves, that will only constitute 3% of total FR funds in it's huge and growing piggy bank.

This auction will be moved to the open market, however the IMF will honor bids from Central Banks and China will no doubt be a focal point. India may also look to bolster it's gold reserves, for the second time in 6 months, at this auction. They may even try to hide their intention using a surrogate possibly. Chinese investors will also play a role as their government is telling it's citizens to invest in the precious metal for their savings and as a hedge against inflation.

Gold as a hedge against inflation? Now there's a novel idea! However, there are smart people who believe that such sales are a drag on gold prices. They use history to bolster that argument.

“When the IMF sells, that’s bad news for gold,” said Leonard Kaplan, the president of Prospector Asset Management in Evanston, Illinois. “Gold goes lower because there’s more supply.”

In the past this has certainly been the case, however, that past did not include the Peoples Republic of China as a buyer, nor the largest democracy on earth (India). It did not include their citizens, 2.5 Billion in total, as individual investors in gold either. As these two behemoths grow their middle class, and then tell those people to invest in gold, well that changes the dynamic, forever, especially when the known gold reserves currently above ground can fit into a space the size of two Olympic swimming pools.

In a gold rush, that supply can get eaten up in a heartbeat! As Government after government print more fiat currency and pump it into their systems, the argument for gold may turn into the biggest gold rush in history.

There is a trend here that investors should not ignore. It's no secret that countries like China, India and others, as well as their citizens, are wanting to diversify their FR funds away from the U.S. dollar, the Yen and the Euro and gold is in their cross hairs. If you don't hold gold or gold stocks in your portfolio in the current environment, then you are not paying attention.

For a more informed opinion on these matters you should read this interview with John Embry, Chief Asset manager for Sprott Asset Management.

Put some gold in your portfolio, now, before the rush!!

Article: If China buys IMF Gold

Soros and Hedge funds betting on gold

Saturday, February 6, 2010

World changing green technology! Getting in on the ground floor!

Big Bend Power Station in Apollo Beach. Figure(1)

Image via Wikipedia

"Carbon Sciences is the furthest along in the CO2 to fuel business" USA Today

Editors note: Carbon Sciences Inc (CABN-OTC) is developing a new breed of "Nano-Reactor" that should revolutionize the nascent carbon capture and conversion industry allowing for the commercialization of converting carbon emissions (from coal and oil fired industries and from natural gas ie: from landfills) directly into usable gasoline, "without" using high energy heat.

The company has already demonstrated it's technology works, and expects to have a working reactor by the end of Q3 2010. The sector is now referred to as Gas to Liquids or "GTL" and it is growing. The company's president, Byron Elton, was recently interviewed by Ally Velchie on CNN Business and that interview can be found at: http://www.carbonsciences.com/01/youtubeplayer.html

Article:

Until now, Carbon capture, and storage has been the high fruit for a number of new companies rushing to get even a small piece of the growing, multibillion dollar industry of cleaning up our coal, oil and natural gas power plants, as well as the millions of businesses who dump carbon into the atmosphere every day. But what if you could not only capture that carbon, but turn it into a usable product with an immediate market?

A small California company, Carbon Sciences Inc. has announced a truly ground breaking technology that, not only utilizes the carbon being released from these entities, but actually turns it into usable fuel, much like mother nat

ure does over a million years, but doing it a lot quicker. Actually, within hours of the carbon capture. Basically, they say they can convert dirty air and dirty water, into an immediately usable fuel such as methanol, gasoline, jet fuel or diesel, doing what mother nature does, only a million times faster.

Needless to say, I was very intrigued by the market potential of such a process. Multi-Billion dollar markets in renewable energy and carbon reduction, heretofore two separate markets, could bring this small company immense wealth in the coming years, if the technology allows commercial application on a large scale, so I dug a little further.
Carbon Sciences recently announced it had invented a nano-scale reactor that functions like a highly efficient artificial microorganism that contains a proprietary enzyme process and serves a single purpose – to absorb CO2 molecules and excrete fuel molecules.

This nano reactor, called Smart Particle, is the key to achieving a fast reaction time and industrial scale up of the company’s CO2-to-Fuel process. The patent application for Smart Particle Technology contains the detailed design of Smart Particles as well as a proprietary manufacturing process where they self-assemble in solution without any external nano-manufacturing.
What I found most interesting is that, other companies racing to perfect similar processes, are utilizing immense heat to produce the same result. Up until now, high heat was necessary to do this. What Carbon Sciences appears to have is a ground breaking process that completely eliminates the need for generating high heat to complete the process and thereby eliminating the need for energy to produce energy. It is truly a novel idea with huge potential around the world. Carbon Sciences will be targeting the markets in the USA and China in it's initial push for a share of this market.

Click on this graphic for an enlarged (readable) version.

For a

video, explaining the process, the Bio-Catalytic conversion and the Nano Reactor, click on: video

The CEO of Carbon Sciences Inc., Byron Elton, explains his company's focus, and the new process in this interview.

Applying Carbon Sciences' patent-pending technology in a laboratory scale prototype last year, the company successfully transformed a stream of CO2 gas into methanol fuel. The demonstration prototype uses Carbon Sciences’ innovative bio-catalytic process to break down CO2 and water, then combines the carbon and hydrogen to form methanol, a low level liquid fuel. The resulting methanol is directly usable as a fuel, or it can be used to build higher-level fuels such as gasoline, butanol and jet fuel. In January the company announced that is now able to produce gasoline directly from their process.

After successfully completing technology design and simulations, Carbon Sciences submitted a patent application, “A Bio-catalytic Process and System to Transform Carbon Dioxide into Methanol” to the U.S. Patent and Trademark Office on February 17, 2009.

According to Beacon Equity Research [.pdf], Carbon Sciences is developing a breakthrough technology for transforming harmful carbon dioxide emissions into the basic fuel building blocks required to produce gasoline, diesel fuel, jet fuel and other portable fuels. Carbon Sciences program plan is to use CO2 as a feedstock for producing portable fuels and simultaneously address the world’s energy and environmental challenges. The firm’s technology takes CO2 from coal-fired power plants and other large CO2 emitters and transforms it into portable fuels.

From the companies officers:

We always wanted to produce high-level fuels, such as gasoline, but knew that additional steps would be required to reach this goal. Now, we have the way to go directly to gasoline.

The United Nations’ IPCC estimates that the cost of simply capturing CO₂ for applications, such as underground sequestration or transformation into products, can range from $45 to $73 per ton of CO₂. This cost is perhaps the single biggest economic barrier to any large-scale CO₂ applications, such as carbon sequestration. However, by being able to use a raw CO₂ flue gas stream in our CO₂-to-Fuel technology, we are no longer dependent on the success or commercial availability of carbon capture systems. In addition, unlike bio fuels based on growing plants to absorb CO₂ from the air, our CO₂-to-Fuel process is an industrial process that can produce fuel in minutes to hours, not months to years, to meet the demands of the world.

—Byron Elton, CEO of Carbon Sciences

We are very excited about these new processes. Our end-to-end CO₂ to fuel system will have several module

s. We have determined that one of these modules can function as a standalone system for use by a sizable part of the energy industry for the production of gasoline. Inquiries from potential strategic partners have further validated our decision to focus on this module. We are anticipating a shorter than normal development cycle for this module and are hoping to achieve commercialization in less than one year.

—Dr. Naveed Aslam, Chief Technology Officer

Carbon Sciences hopes to develop a commercially-attractive package by the third quarter of 2010 and are exploring a "strategic partnership" to take the process--and the company--to the next phase. They have also applied for DOE technology funding under the category of "Innovative Concepts for Beneficial Uses of CO2".

Disclosure: I bought some Carbon Sciences Stock on Friday, as it spiked while the markets were in full fear mode. I thought I'd get in before the rush. Sure, it's a penny stock, but so was RIMM at one time. If it only goes to .50 our profit will be 500% in a very short time frame.

The company is listed on the Nasdaq OCBB as CATB

More info at: CleanTech - CNN - Marketwire

A Professional Reviews Carbon Sciences Technology

Carbon Sciences Mar 2010

At UCLA May 2010

Monday, February 1, 2010

Capitalism, greed, and the faustian bargain of more liquidity

"Capitalism is

the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone" John Maynard Keynes

"The best way to destroy the Capitalist system is to debauch the currency" Vladimir Lenin

As more Billionaires are made, and the current ones increase their wealth in leaps and bounds, in the same year that workers are tremendously punished, and stand to lose their futures, one wonders if Capitalism itself isn't the third system to meet it's fate after National Socialism (Nazism) and Communism. Today, the pure Capitalist system is shown wanting, as never before. Let's call it "Kudlow Capitalism" after CNBC's very outspoken, cheer leader, of the billionaire club, Larry Kudlow. You know, the TV host who never allows anyone with a different slant on Capitalism to talk more than 20 seconds without either cutting them off or talking over their voices. The same guy that is now blaming President Obama for all the troubles, along with Fox news, who now resemble the Nazi propaganda machine of the 1930's

When "investment banks" hoard tankers full of oil offshore, awaiting a rise in oil prices, so as to pounce on the unsuspecting consumer like a cougar, is that good for the rest of the economy? Remember, this is not an oil company that needs storage space for a glut on the market, but an "investment bank"! Should they be allowed to speculate on such a large scale, in such a necessary commodity? Oil speculation is only one example of the "fingers in the cookie jar" mentality of big investment banks like JP Morgan and Goldman Sachs. As I've said before, if the price of oil is $70, you can probably chock up $25 of that price to these types of giant, market moving, speculators. (That's about 36% of the cost of filling up your cars gas tank). No wonder GS has come to be labeled a "Giant vampire squid" smothering the face of society with their tentacles following the smell of money into every orifice.

Several years ago,

GS collected a $300,000,000 fee to help the country of Greece essentially fudge the numbers of their national debt. (to allow the lying Greek government to get into the Euro zone by skirting the necessity to disclose it's total debt ratio) Now their bets against that same debt stand to make them even more money. Essentially they gave Greece a reason to burn the house down, then bought insurance against the fire. Is this fraud or just good money management. You decide if they deserve the title of Vultures of Wall Street! (See Bank Bets - New York Times )

Investors in the Euro have already decided, by dumping their Euro's. Greece may yet get bailed out by it's Euro partners, but don't count on it. Why should hard working, prudent Germans, who have recently been told they cannot collect old age security pensions until after age 67, suddenly feel the urge to bail out free spending and freeloading Greeks, who can retire at 60. With Spain Portugal and Italy waiting in the wings for their own rescue, why would Germany and France (who have troubles of their own) even consider it. Greece should be ejected from the Euro zone unless or until they get their sick fiscal house in order, and their bulging debt under some sort of control. Civil unrest will result.

Speaking about sick fiscal policies and massive debt, The United States budget forecasts a $1.7 Trillion dollar debt for this year, bringing total debt to around $14T (depending on which number are crunched) by year end. If America continues to pump liquidity into the system, the storm clouds of 2008 will begin to pail in comparison with those forming over 2010 and beyond. The U.S. Government is now the sole backer of mortgages in the Country through it's control of Fannie Mae and Freddie Mac. If they nationalized those two entities right now, that would add over $5 Trillion to the U.S. Debt book. Add to that the fact that China is owed a big chunk of the United States debt at a time when a trade war with the Country looms large and those storm clouds get darker still. China holds $2 Trillion in their FE account, (including $800 Billion in U.S. debt) has been storing up massive amounts of commodities, is ahead in the production of green energy initiatives and has more than three times the population, so who is best suited to withstand a protracted trade war? Couple all of this with the continuing "gaming of the U.S. system" by the vultures of Wall Street, and the picture for prosperity in the Good Ole U.S. of A is dimming daily.

Weighing in on the "Faustian bargain" of Keynesian economic theory this week was none other than Conrad Black, in a letter to his old Alma Mater, the National Post (Almost surely written from his jail cell). The audacity of an old Bay Street fraudster, writing about the futility of propping up markets with so much liquidity, while other, bigger frauds are being precipitated upon an unsuspecting public purse, by much bigger "Wall Street" fish, exactly because of the liquidity infusion, was a little comical.

Whether the infusion of money comes from taxpayers (TARP and it's ilk) or from common shareholders, (as in Conrad Blacks case) there is always a vampire squid swimming nearby to latch on and leach every bit of money it can settle it's tentacles upon. Why does the general public always seem surprised when Wall Street Vultures pay out to their executives, over $100 Billion in bonuses for one year of speculation, while the American taxpayer is given a bill that neither they, their children or their grandchildren will be able to pay.

It is said that, "power corrupts and absolute power corrupts absolutely". Since the early 1970's we've been fed the mantra" greed is good" and "free markets can regulate themselves" (greed good - regulation bad - ie: Larry Kudlow and company) and that Government should just get out of the way and let markets regulate themselves. We are now reaping the painful rewards of that mindset. The vultures of Wall Street have proven that "Greed is corrupt, and absolute greed is corruption absolute"! The opposite of greed is not thrift. It is generosity. Generosity is a word completely lost on Wall Street. Vultures aren't generous, indeed they don't really care who they feed upon, but only that they feed.

The crooks

settled in and took over the store so long ago that they have convinced the police that they are actually the owners. Only when the real owners return and demand change, will real change occur, but don't hold your breath. Every time that notion takes shape, the crooks rally the troops in Washington and the uninitiated across America, then threaten to close the great Casino, and everyone goes away until it re stocks and re-opens for business again.

Maybe it's time to tear down the Casino and start again!

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